KUALA LUMPUR – Malaysia’s workforce showed signs of growth, from 17.17 million to 17.20 million in July, while the jobless rate held steady for yet another month. This slight improvement in the number of employed talent indicates stability in the national economy, Labour Force Statistics suggest.

An additional 26,300 individuals found work in July. Overall, the segment of the population who had a job grew 0.2% month on month, from 16.61 million in June to 16.63 million in July, according to Datuk Seri Dr Mohd Uzir Mahidin, the country’s chief statistician.

Economic stability for Malaysia

This steady growth can be attributed to higher consumer spending, stability in local business activity, and a rise in export, tourism and investments into Malaysia, analysts believe.

“The country’s labour market remained stable, following the country’s growing economic position, recording a steadily increasing number of employed persons, while the number of unemployed is decreasing,” Datuk Seri said.

Three in four workers in Malaysia during this period were classified as employees. “This category,” Datuk Seri said, “rose by 0.1% to 12.48 million persons compared to 12.46 million persons in June.”

The services industry took in more workers in July, particularly in the food & beverage sector and wholesale & retail trade. Other sectors on an upward hiring trajectory included manufacturing, construction, mining & quarrying, and agriculture.

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Warning on underemployment among Malaysians

Just like in months prior, Malaysia’s unemployment rate remained at 3.3% with the number of out-of-work talent decreasing by 0.3% from 565,300 in June to 563,700 in July. Year on year, unemployment declined from 579,200 in July 2023.

Of the unemployed, 80% were said to be available for work and actively job hunting. Among them, 61.5% have been actively unemployed for less than three months. Meanwhile, youth unemployment was unchanged at 10.5% for those aged 15 to 24.

Malaysia’s labour force participation rate remained at 70.4% in July.

At an event at Universiti Sains Malaysia today, HR Minister Steven Sim, for his part, warned against underemployment standing at 37% in the second quarter.

“Imagine if 5% of the workforce, around 750,000 workers, fall into the underemployment category. If their productivity decreases by 20% due to their skills not matching the job requirements, it would equate to the country losing productivity equivalent to 150,000 workers,” he said.

“This could lead to a GDP growth reduction of 1% to 1.5% or about US$4.2 billion to $6.3 billion in economic output annually.”

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A ‘stellar’ second quarter for the Malaysian economy

Like most of Southeast Asia, Malaysia has “remained steadfastly resilient and broadly delivered credible economic growth,” findings from McKinsey showed.

“Malaysia recorded a stellar second quarter, with the economy firing across various cylinders,” analysts said.

“Economic growth accelerated to 5.9% this quarter; the highest growth recorded since the start of 2023. Expansion in exports and strong domestic demand supported growth. The labour market remained tight while industrial output expanded, and investment activities continue to be robust,” they noted.

“The ringgit held steady during the quarter, becoming one of the best performing currencies in the region, while inflation experienced a nominal increase.”